How to choose the right jurisdiction to protect your assets

I know that the term “protecting property in an offshore” or “protecting capital in an offshore” can demoralize some readers of my blog about offshore companies, bank accounts, and schemes. In fact, many clients should figure out what they really need – a good old offshore bank account or a personal strategy and scheme for protecting accumulated capital abroad? What is the actual difference? And most importantly, how to ensure that your assets are protected?

You may have already thought about opening an offshore bank account. Even a simple private bank account outside of one’s own country is already a big step towards a secure financial future. The simplest offshore bank account opened for an individual gives you free access to foreign currencies and investments that you would not be able to access through the bank of your home country.

The opportunities that open up for you with the opening of a bank account abroad are not limited to access to a wider range of financial instruments. Most individuals today apply for opening an offshore bank account not as individuals, but on behalf of a corporation, offshore company, foundation or trust. This kind of corporate veil allows for a relatively low fee to acquire a much more reliable degree of security and confidentiality of your deposits to the accounts of foreign banks. I’m not even saying how much more reliable an offshore corporate bank account is compared with a regular account for a private person opened in your country. The corporate veil also works well in the twenty-first century if an offshore company is correctly registered in a suitable offshore jurisdiction.

To begin with, I would like to draw the attention of readers of my blog about opening safe offshore bank accounts for a number of reasons why it is important for the ordinary citizen to protect their savings from creditors, plaintiffs and even his country’s government by choosing in advance a more suitable jurisdiction on private property.

In order for you to understand how, why and why you can use the legislation of your home country to protect your property and accumulated capital, let’s look at some of the basics of jurisprudence.

According to the constitution, in democratic countries, state power is most often represented by three types of power:

Legislature makes laws. This is the parliament or the Senate and the House of Representatives in the United States. Selected legislators vote to enact laws and create a legislative system.

Administrative power is bureaucrats whom we have not elected. Their job is to administer a system developed by the legislature. The function of bureaucrats is not to think and reflect. A simple example on the fingers. In the UK, the same bureaucrats who issued ID cards in the UK are now closing this system by order of new members of the legislature.

The judiciary is lawyers of various calibers who discuss the laws that the legislature voted for. Their work is the interpretation of complex and sometimes ambiguous laws.

Legislative, federal and judicial authorities must act separately and independently of each other. All three branches of government have a clearly defined role, and this system has worked quite recently. But nowadays the system no longer works as originally planned. In other words – the system does not work.

First, elected representatives of the legislature do not always read the laws for which they vote. Even if they read these laws, there is no guarantee that they will understand them … because the bills submitted and proposed for voting are often deliberately confused and designed to be ambiguous. Important parts of the law slip unnoticed, and this is exactly what bureaucrats need.

A good example is the HIRE Act in the USA. This act is supposedly designed to prevent unemployment, but this legislation is also the strongest extraterritorial legislation in US history that intervenes in the business of foreign banks, as well as US citizens who live and work outside the United States.

Bureaucrats rarely tend to think for themselves, but if they begin to interpret legislation, they do it in the most perverted and not provided way. Modern legislation that emerged from under the stamp of legislative power, but developed by bureaucrats inclines bureaucrats to the interpretation of legislation that is beneficial for them.

In turn, the judiciary has become very susceptible to politics. In the US, you are more likely to get a lawsuit than to go to the hospital. In countries such as the United States, Canada, the United Kingdom, and Australia there is a whole layer of lawyers who work for a percentage of the amount won and act like predators. Judges play up to lawyers and feel Robin Hoods, redistributing wealth.

The main problem of the modern judicial system is that it is too easy and simple to sue you. The plaintiff does not have to pay a lawyer who works for a percentage of the won, in advance, and thus can sue you for anything. And such lawyers work very well for a high percentage of any maximum amount that the plaintiff can get you to sue. If you are a wealthy person, then the lawyer will not have to try hard to make you a villain in the eyes of the judge and the jury. The judge will redistribute part of your condition in favor of the plaintiff, who may not have worked honestly for more than one day in his life.

What conclusion can you draw from the foregoing? As I already wrote, the system of legislative, executive and judicial power in the complex no longer works. In other words, you and your family can no longer rely on the government and judicial system of your country to protect your constitutional rights, namely the rights to personal financial freedom and property. In some cases, it is the government that violates your constitutional rights.

At the moment, the governments of large countries simply do not have enough money, and they tighten the nuts. Previously, people were warned in advance about tax increases so that they had time to prepare, but this is no longer the case. In June 2010, the tax on capital gains overnight rose by 10 points.

While European states traditionally built a pyramid-style pension system in the USA, they approached the issue of pensions more professionally. But at the moment, the Obama government is very eagerly looking towards the pension funds of ordinary US citizens. I’m not saying that they are simply being confiscated, but the government can get more control over these funds in the name of “investor protection and investment” and insist that pension funds be invested in such a supposedly AAA level investment fund as government debt.

It is a mistake to think that the strategy of protecting capital, investments and property is only needed by very rich or representatives of professions connected with the risk of being tried, for example, by doctors.

Nowadays, a property protection strategy is needed for any person who has a pension savings plan or any business owner, as well as any person with a bank or brokerage account with so much money, the loss of which could affect the quality of life.

In two months, Russia got rid of 84% of US treasury bonds. This is according to the US Treasury. Thus, the Russian Federation reduces political risks and partially unties itself from the States. However, there is an opinion that in fact most of the bonds belong to Russia, they just hid them offshore.

Relations between the United States and Russia are at the lowest point in many years. This concerns not only political rhetoric but also economic pressure. Mutual sanctions, accusations and unwillingness to find a common language directly affects everyone. Especially, on ordinary residents and entrepreneurs.

Russia is preparing for a new wave of sanctions, which promise to be the toughest for all the time of sanctions opposition. Despite it, international trade must continue – this is the law of the modern market.

The Ministry of Finance of Russia buys tons of dollars and this drops the ruble. Central Bank gets rid of US Treasury bonds, one of the most liquid assets. And if the dollars themselves are needed for almost any cross-border transaction, the refusal of bonds is a decision made because of political risks.

As a result, from March to May 2018 Russia got rid of 84% of US bonds, reducing the volume from 81 billion to 15 billion dollars. Also, the Russian Federation continues to buy gold and other currencies in order to change the structure of its gold and foreign exchange reserve.

However, some analysts deny that Russia is acting so dramatically and unequivocally. Representatives of the Council of International Relations, a private expert organization in the United States, which assesses international relations, believe that in fact, Russia has transferred part of its bonds to offshore.

In their opinion, the Russian Federation got rid of only 45% and transferred the remaining 39% to other jurisdictions.

They noticed that in April the number of bonds owned by Belgium and the Cayman Islands sharply increased. They received 25 billion and 20 billion, respectively. It turns out about as much as it lacks in the official calculations of the US Treasury and the Central Bank of Russia.

Experts consider such a decision to be logical due to the current situation. The further the tension between the two countries continues to increase, the more often Russia will resort to cunning methods, including “offshore” ownership of its own assets. Experts see the prospect of strengthening this trend in the coming months.

Whether Russia uses offshore companies to store bonds is an ambiguous question. However, if this is so, then you should evaluate the decision and apply it at your level.

Despite the low yield, high cost and other shortcomings, the bonds remain one of the most liquid assets. To invest part of the money in the purchase of bonds is a familiar solution for wealthy individuals.

Why not use foreign companies for storing bonds and other assets? Why might this be interesting to you?

How offshore companies may protect assets?

By creating a foreign company and transferring assets to it, you get several advantages at once:

Risk diversification: if something happens to your core business or economic/social/political cataclysms occur in your country, assets outside the system will remain under reliable protection;

Access to various tools: foreign companies and accounts can be the key to unusual investment products, business opportunities, financial solutions. Thanks to a company or an account, you expand the picture of the world and are able to achieve a higher investment efficiency;

The ability to optimize the business: reduce the cost of servicing the company, increase profitability, find new customers and the like;

Take advantage of the tax benefits of some jurisdictions.

Here it is important to understand that tax residents of Russia need to report on controlled foreign companies. If the company’s income exceeded 10 million rubles – and pay taxes.

You also need to remember that the data on passive companies are automatically transferred to the tax authorities. If the company receives most of its revenue from interest on bonds, stocks, dividends, and the like, that information will fall into the field of vision of the tax authorities because of the automatic exchange.

Is there a way to get rid of tax status? Yes, this requires more than 6 months for the last year to be absent in Russia. In this case, it is not necessary to report on the CFC and provide information on bank accounts.

Who did not hide – he is not guilty: how automatic exchange prevents to hide from paying taxes

In order to ensure a comfortable life, wealthy people get a residence permit in jurisdictions with a high standard of living, do business in countries with relatively low taxes, and keep money in countries with reliable financial systems.

By the way, according to the theory of 7 flags, it is necessary to diversify the elements of your life as much as possible: to live in one country, earn in another, keep earned in the third, and get citizenship in the fourth. Moreover, there may be several passports. By the way, nothing prevents you from getting a second passport either, especially since it can be done in just a few months until the next economic war spoils the blood of the business.

For those who plan to diversify risks, we offer to register a foreign company and open for it, if necessary, a bank account. Which jurisdiction to apply depends on your goals and wishes. We are ready to suggest where you should direct the stops. To do this, you just need to sign up for a free consultation on the selection of a bank account. The account is the basis for any business and you will be able to more clearly understand where to go, having understood the bank.

Moreover, thanks to us and the pre-approval service, you will be able to increase the chance of opening an account, as you submit an application to several banks at once.